For a company that made its name from ringtones and SMS subscriptions the age of the iPhone has been a hard one to come to terms with. However according to its CEO Zamano is now in a position to reap the rewards of a very mobile future.
It is only a few years ago that the extent of downloadable content for a mobile phone was a customisable ringtone. Back then phones, and the business models for companies looking to profit from them, were much more straight-forward.
Today things are much more media-rich, with devices doubling as pocket computers capable of accessing almost anything within the reach of a traditional PC. For Zamano, an Irish company built on ringtones subscription services, this is a very difficult circle to square.
“The transition has been painful for us,” said John O’Shea, CEO of Zamano. “Everything changed, for example we used to spend £1m a month on print advertising in Ireland, UK and Australia three years ago; now it’s less than £50,000.”
The company’s customers were moving online and to more online-capable smartphones and as a result the most obvious route for the company to move to was mobile apps. The company did have an initial foray in the area too, which included becoming victim to Apple’s first major cull of apps deemed to feature unsuitable content for its store.
More recently the idea of being an app developer has been dropped altogether, with a handful of apps left in Apple’s App Store as the only proof that they ever tried at all.
“One of the mistakes we made was that we started developing apps; the content of the stuff we were developing just wasn’t good enough to sell,” said O’Shea. “To be honest I can’t see how anyone can make money in an app store bar the odd unusual case where someone sells a million.”
Such scepticism about making profit from apps is not unfounded. At present there are hundreds of thousands of apps available for the iPhone alone, many of which are free to download. As if this huge amount of competition was not enough paid-for apps make up the minority of those downloaded and Apple – much like other app store operators – take a 30% cut straight off the top.
However with this move by consumers to new mobile buying habits and the company’s inability to get an immediate handle on it Zamano has endured a bit of a rocky patch.
In 2008 the company, which is listed on the AIM exchange in London, posted a €3.8m loss. In 2009 the company suffered a further 39% drop in revenue, though it did return to profitability during this time.
This is the transition that O’Shea said Zamano was going through. The company was moving away from the very fickle world of ringtones and into something more high-margin, low-volume.
According to O’Shea the company is now focusing in on three specific areas; digital marketing, presentation and sign-up and billing. In short Zamano now aims to present and promote unique content to customers and bill them once they sign up – the content itself, however, is outsourced.
Its latest deal is a clear example of this shift. The company is now working with Setanta Sports to offer videos of English Premiership goals directly to people’s phones within minutes of them happening. It comes on a subscription-basis and can be tailored to the needs of the individual user.
“That’s a very rich service compared to the ringtone service that would have been there years ago,” said O’Shea. “Handsets are getting much more powerful and bandwidth availability is so much greater be it through 3G or Wireless so these things can and must be more media rich.”
The beauty of using a browser-based solution, according to O’Shea, is that it allows them to push content through to any type of phone. In order to do that via the app route they would need to develop and support upwards of five separate applications, one for each of the main platforms in use today.
Taking the SMS and browser route also gives the company more flexibility in terms of how it monetises the content, as the likes of Apple’s iPhone does not yet allow the rolling subscription services that Zamano currently use.
Part of the reason for this may be because of the bad reputation mobile subscription services have gotten over the years, something O’Shea is all too aware of.
In its early days SMS marketing and subscriptions were a bit of a no-man’s land in terms of regulation but as Governments began to understand the issue they have begun to legislate. However O’Shea said his company has been ahead of the curve in this area, enforcing its own code of practice and dropping clients who continued to do things the ‘old fashioned’ way.
“Regulations became a lot more prescriptive as time passed and people began to understand the services more but we have our own code of practice in place too,” he said. “I can stand over everything we do in terms of complete compliance.”
This has not made things any easier as the company sought to move to a new area of a very new market reality, however O’Shea is confident it is paying off. He is equally confident that the moves Zamano are making now are enough to future-proof it against any further shifts in the years ahead.
“People’s perceptions of what they can do with their handsets is dramatically changing and that’s of benefit to people who can provide them with what they want,” he said. “There’s lots of potential but at the same time the key thing is that people’s web usage on their handsets will go through the roof; we’ve got to offer a better customer experience matched with what their needs are and it’s a hard one.”